Power Purchase Agreement (PPA)

A Power Purchase Agreement (PPA) is a contract between a renewable energy provider and a buyer, typically a utility or large company. It outlines the terms for generating and purchasing electricity over a set period, often 10-25 years. The provider commits to building and operating a renewable energy project, like a solar or wind farm, and the buyer agrees to buy the electricity at agreed rates. PPAs help finance renewable projects by guaranteeing revenue, making them essential for expanding clean energy. Essentially, it's a long-term partnership ensuring a steady supply of renewable power for the buyer and predictable returns for the provider.